American multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores, Walmart Inc. (NYSE: WMT) seem poised for a price surge according to its latest charts.
#1 Good support levels: The daily chart of Walmart shows that the stock has good supports nearby. The latest candle has taken support at the 200-day Moving Average. There is also a trendline support nearby, which is marked as purple line in the daily chart.
#2 Oversold RSI: The daily chart of Walmart shows that RSI is oversold. This implies that the selling momentum is weakening and the trend reversal might be around the corner. This is yet another bullish sign.
#3 Hammer: The latest candle of the daily chart is a hammer, which is a bullish candlestick.
#4 Support at Fibonacci Level: The weekly chart of WMT shows that the stock had been on an uptrend from November 2015 and formed a top in January 2018. Since then, the stock has been correcting.[hana-code-insert name=’adsense-article’ /]It is now near the 61.80% Fibonacci retracement level of this move from $56.30 to $109.98.
Usually, after an up-move, stocks retrace to any of the key Fibonacci levels before resuming its upmove.
So, this 61.80% retracement level seems like a good support area.
#5 MA Crossover: The 50-week SMA had crossed above the 200-week SMA. This is also another bullish sign.
#6 RSI Nearing Oversold: From the weekly chart of Walmart Inc., it is evident that the RSI is near oversold levels.
#7 Resistance-Turned-Support Level in the Weekly chart: As seen from the weekly chart, there is a resistance-turned-support level for the stock which is marked in green dotted line.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase half the intended quantity of shares of Walmart at the current price of $89.08 and the rest when the stock corrects to the trendline support of the daily chart, which comes to around $84.50.
TP: Our first target price is $100 and the second target price is $110 in the next 4-6 months.
SL: To limit risk, place a stop loss at $80.40. Note that this stop loss is on a closing basis.
Our target potential upside is almost 12% to 30% in the next 4-6 months.
Entry at $84.50: For a risk of $4.10, our first target reward is $15.50 and the second target reward is $25.50. In other words, this trade offers nearly 4x to 6x more potential upside than downside.
Entry at $89.08: For a risk of $8.68, the second target reward is $20.92. In other words, this trade offers nearly 2x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the uptrend line. The sell-off of the stock could also be triggered in case of any negative news, overall weakness in the market, or any regulatory changes in the sector.
Tara[hana-code-insert name=’investorplace-article’ /]